Slow But, Certain Change Of Attitudes On The Reverse Mortgages

Homeowners age 62 and older who have either paid off their home in full or have a considerable amount of home equity– and use the place as their primary residence– can use a reverse mortgage to tap their housing wealth while still living in the home; the loan can be repaid when they move, sell or die. The Federal Housing Administration’s Home Equity Conversion Mortgage program is a commonly used one.

Some homeowners may be forced to reshape their opinions on reverse mortgages. Relevant is that many Americans near retirement age have a considerable amount of wealth in housing equity; 25 % of all wealth was held in the form of home equity in 2011, according to the U.S. Census Bureau. Feeling crunched talk to the most reliable Florida reverse mortgage Lender for the latest information.

It’s a tremendous safety net. People today who would tell you they ‘d never want to use a reverse mortgage; 10 years from now, some will have to use it. Reverse Mortgage

Others might begin incorporating reverse mortgages more strategically in their retirement planning. A homeowner could use a reverse mortgage to draw upon his or her home equity for income needs when the stock market is in decline (allowing more time for a portfolio to make up for the losses).

Using a reverse mortgage in this manner isn’t obvious to many. That’s why last month, Generation Mortgage launched Nu62. com, a website dedicated to explaining the various ways one can be used. There are a lot of misconceptions about reverse mortgages, and “it’s going to take the industry a lot of effort to demonstrate to the public how it works.”. Best Reverse Mortgage Advice In State of Florida

It also helps that some financial professionals outside the reverse mortgage industry are also beginning to accept the mortgages. “Over the past year or two, a few articles have been published in the Journal of Financial Planning and other professional publications suggesting that reverse mortgages have a place in a comprehensive approach to personal financial management for retirees,” said Peter H. Bell, chief executive of the National Reverse Mortgage Lenders Association, in an email interview. “There are a few different approaches advocated by different planners, but essentially they all boil down to strategies to preserve the duration of assets through retirement.”.

Read a report from the Center For Retirement Research at Boston College: “How Important Is Asset Allocation to Financial Security in Retirement?,” which recommends the strategic use of reverse mortgages to bridge the gap between income and expenses in retirement.

Retirees often will have peaks and troughs when it comes to their cash needs. That sometimes means they have to cash in assets at inopportune times, such taking money from certificates of deposit before they’re mature or selling stocks in a down cycle.

By using a HECM as a standby cash reserve, drawing on it during peak demands for cash, other assets can be retained until maturity or recovery. The net result is a greater amount of wealth preserved to fund longevity.

Changes to the FHA’s reverse mortgage program could make it a safer option for retirees. For one, FHA limits the amount of money that can be drawn at closing and throughout the first year when seniors take out a reverse mortgage.

Granted, there are a limited number of people using reverse mortgages now. The FHA reports that only 60,091 reverse mortgages were originated in the 2013 fiscal year. But while retirees may currently only know one person with a reverse mortgage today, there may come a time when they know 20.

Up until now, it has been a stigma product, and many people who use them have been “desperate, a senior research economist at the Center for Retirement Research at Boston College. “Whether you would get to the point where retirees would gather to play bridge and say to each other ‘Where did you get your reverse mortgage?'” remains to be seen, he added.

A homeowner could use a reverse mortgage to draw upon his or her home equity for income needs when the stock market is in decline (allowing more time for a portfolio to make up for the losses). Using a reverse mortgage in this manner isn’t obvious to many. It also helps that some financial professionals outside the reverse mortgage industry are also beginning to accept the mortgages. “Over the past year or two, a few articles have been published in the Journal of Financial Planning and other professional publications suggesting that reverse mortgages have a place in a comprehensive approach to personal financial management for retirees,” said Peter H. Bell, chief executive of the National Reverse Mortgage Lenders Association, in an email interview. Granted, there are a limited number of people using reverse mortgages now.